Federal Reserve Press conference comparison — 28 April 2021 vs 16 June 2021
This Federal Reserve press conference comparison covers 28 April 2021 and 16 June 2021. Overall, the newer document was more hawkish. Overall, the June 2021 FOMC statement marks a hawkish shift from April, as the Fed acknowledged upside inflation risks and brought forward the expected rate path and tapering timeline. However, it maintained a patient, data-dependent stance, signaling that any actual policy changes remain contingent on further progress.
What changed
More hawkish. Overall, the June 2021 FOMC statement marks a hawkish shift from April, as the Fed acknowledged upside inflation risks and brought forward the expected rate path and tapering timeline. However, it maintained a patient, data-dependent stance, signaling that any actual policy changes remain contingent on further progress.
- Inflation — More hawkish. The Fed introduced conditional hawkish language on inflation, signaling readiness to adjust policy if inflation persists, a shift from prior's exclusive transitory framing.
- Labour Market — Little changed. Labour market language remains cautious, emphasizing distance from maximum employment and patience, similar to prior.
- Rate Path — More hawkish. The Fed's dot plot shifted to show an earlier rate lift-off in 2023, a hawkish tilt from the prior patient stance, though conditional guidance remains.
- Balance Sheet — More hawkish. The Fed signaled that tapering discussions will commence at future meetings, advancing the timeline from prior silence on balance sheet.
Key wording
Today my colleagues on the FOMC and I kept interest rates near zero and maintained our sizable asset purchases.
we continue to expect it will be appropriate to maintain the current 0 to ¼ percent target range for the federal funds rate until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. I would note that a transitory rise in inflation above 2 percent this year would not meet this standard.
However, these one-time increases in prices are likely to have only transitory effects on inflation.
Employment rose 916,000 in March, as the leisure and hospitality sector posted a notable gain for the second consecutive month. Nonetheless, employment in this sector is still more than 3 million below its level at the onset of the pandemic.
The economy is a long way from our goals, and it is likely to take some time for substantial further progress to be achieved.
no, it is not time yet.
Today the Federal Open Market Committee kept interest rates near zero and maintained our asset purchases.
We continue to expect that it will be appropriate to maintain the current 0 to ¼ percent target range for the federal funds rate until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
If we saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal, we’d be prepared to adjust the stance of monetary policy.
how do we think about it? A couple of things. We’re all going to be informed by what we saw in the last cycle, which was labor supply outperforming expectations over a long period of time. Now, that hadn’t happened in many other cycles, but this was a very long cycle. So we’re going to have to be alert to see whether that can happen again.
the median projection for the appropriate level of the federal funds rate now lies above the effective lower bound in 2023.
While reaching the standard of “substantial further progress” is still a ways off, participants expect that progress will continue. In coming meetings, the Committee will continue to assess the economy’s progress toward our goals. As we have said, we will provide advance notice before announcing any decision to make changes to our purchases.
Official documents
Background reading
Related
28 April 2021 press conference · 16 June 2021 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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